Cohousing-L Mailing List: Cohousing Costs and Budget

[Dan Suchman (71756.2661]

I never heard from Susan Pintus as to whether my message of 2/23/95 was of any
help to her.  However, I have received several requests for copies of the MCP
spreadsheet used to analyze development costs, as well as the letter of intent
between MCP and its prospective developer.  I'd be happy to share these
materials with anyone that would like copies.  If you'd like to receive the
documents by email, you must have the ability to decode files sent in .UUE
(uuencoded) format.  The spreadsheet was created in WordPerfect for DOS version
5.1 (no kidding).  The letter of intent can be sent and received in normal ASCII
text format.

As to the spreadsheet:  Needless to say, the numbers for individual projects
will differ.  The real value of this spreadsheet is in its suggested method of
analysis.  I have no idea whether the WP format can be imported to other more
conventional spreadsheet applications such as Lotus 1-2-3 or Microsoft Excel.
You might have to use this printed spreadsheet as a pattern to create your own.

As to the letter of intent:  This letter represents a first draft created by MCP
and delivered to the developer.  Naturally, MCP sought to shift as much risk and
cost to the developer as possible (although MCP intended to pay the developer a
profit for bearing this risk and cost).  Your particular group may choose to
retain more of the risk and cost, and thereby reduce fees paid to the developer.
This particular developer intended to raise part of its capital from outside
investors.  Cohousing residents wishing to take some risks in exchange for
potential profit would have an opportunity to be part of that investor group.
(If you think a company is making too much money, buy stock in the company!)

If you would like copies of either of these document via email, please send to
me a private email message requesting same.  Remember, you will need to decode
the spreadsheet in order to see it.

If you would prefer to received printed copies via "snail mail", please send a
self-addressed, stamped envelope ($ .58 postage) to:

                Dan Suchman                     
                Post Office Box 11378
                Bainbridge Island, WA 98110-5378

                Telephone/Fax: (206) 842-9700

I'd also like to suggest to those acting as their own developers that the group
be careful about documenting the disproportionate contributions of cash to the
group.  I strongly suggest that the group's partnership agreement, shareholder
agreement or other organizational document clearly provide that excess
contributions be treated in one of the following ways: (a) as loan to the group,
which accrues interest at some agreed rate, and which is payable to the
contributor either on a date certain, upon the happening of a stated event (such
as upon getting a bank loan), or upon demand,  (b) as a capital contribution to
the group, which increases the contributor's capital account (or number of
shares) in the venture, and providing that the capital be returned to the
contributor in some manner out of proceeds from capital transactions (such as
sale or refinancing of the assets/land owned by the group), or (c) as a gift, in
whole or in part, to the group.  Failing to address expressly these excess
contributions in one of these ways is a formula for misunderstanding and
conflict at a latter date.  At least one cohousing community that I know of
failed to expressly address this issue and did not even realize until a few
years after construction that the excess contributors had essentially made a
gift to the community that they would never recover.  That fine, except it was
not what the contributors intended and led to some upset on the part of these
unwitting "donors".

I'd love to discuss these issues further with anyone that might be interested.